The COVID-19 pandemic and the global oil price crash will significantly impact Australia’s LNG industry in the coming months, according to EnergyQuest.
The latest report from the energy analyst said although the impact of the virus on Australia’s LNG deliveries has so far been minimal, exporters will feel the impact of current market conditions on their revenue in Q2 2020.
A breakdown in talks between Saudi Arabia and Russia earlier this month resulted in oil prices to fall as much as 30 per cent and the drop causing the price of oil-linked LNG cargoes to be 25–30 per cent cheaper.
EnergyQuest said China and Japan, Australia’s two biggest LNG customers were expected to consume less gas as result of COVID-19 and cheaper contracts resulting from the oil price crash were unlikely to accelerate demand.
Major oil and gas events across Australia have also been added to the list of virus cancellations, with the Australian Petroleum Production and Exploration Association Conference and the Australian Domestic Gas Outlook 2020 event both announcing last week they will not proceed as scheduled.
The West Australian is also reporting Chevron has put 20 staff in lockdown at its Barrow Island Gorgon facility in Western Australia as it awaits the results COVID-19 testing, although the facility is continuing to produce natural gas.
EnergyQuest estimated Australia exported 6.1 million t of LNG in February through a total of 90 cargoes, compared to 103 cargoes in January.
Shipments on the west coast were partially impacted by Cyclone Damian in WA, as well as the temporary shutdown of Shell’s Prelude FLNG project.
Japan received 31 per cent of Australia’s cargoes in February, followed by China with 29 per cent and Korea with 12 per cent.
Projects on Australia’s west coast accounted for 4.254 Mt of the shipped LNG.
For more information visit the EnergyQuest website.
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